Why when and how you should review your Home Loan?
To review your Home Loan is as important as getting a health check up on a regular basis. Read our handy guide on reviewing your Home Loan and Home Loan balance transfers.
If you have opted for a long-term Home Loan with a fixed interest rate, chances are you may not have reviewed your Home Loan recently. This is because you have a fixed EMI which you are paying every month. But did you know that unless you review your Home Loan on a yearly basis, you might be paying the EMIs at a higher interest rate even when the market is flush with liquidity and funding is cheap? To avoid such situations, it is advisable to review your Home Loan at least once a year.
We highlight the essentials of reviewing your Home Loan:
Why to review your Home Loan?
Reviewing your Home Loan is like a health check that ensures you are saving as much money as possible. It will tell you exactly where your Home Loan payments stand. You could be paying the same EMI you had been paying previously, but the interest rate could have increased, thus keeping the EMI same but increasing your tenure. This would make you pay a bigger amount overall on your Home Loan, which you may not realize until much later. So, if you review your Home Loan, you can revise the tenure or EMI. What’s more, you could find lesser-interest rate options available with other lenders. In such a situation, you could opt for a Home Loan refinance, since many lenders do not impose foreclosure charges.
When to review your Home Loan?
Just like regular or yearly health checkups are necessary for your body, you need to review your Home Loan yearly. If you don’t do this, you are not using the interest-saving features to your benefit and not working towards repaying your Home Loan quicker. You really need to review your Home Loan when the interest rate has increased, when your tenure of fixed interest rate is nearly over, when your interest-only period is due to expire, when you have several other existing debts, or when your financial condition has changed.
How to review your Home Loan?
You can review your Home Loan by comparing your existing interest rates with the rates offered by other lenders to see which one benefits you the most. Make sure you also check the processing fee and Home Loan transfer or transfer housing loan fee that is applicable. Avoid spending too much on these charges. This way, you can save a lot of money and use the extra money to invest elsewhere. Even a difference of 1 per cent could make a lot of difference to the overall investment made by you and the amount you save. After all, we are talking about big investments here.
Bajaj Finserv offers low interest rates for Home Loan balance transfer along with pre-payment facility, zero foreclosure charges as well as three-EMI holiday feature.